FOREIGN CAPITAL INVESTMENTS IN THE BANKING SECTOR AND POTENTIAL EFFECTS ON THE ECONOMIC GROWTH: TURKEY IMPLEMENTATION

Abstract

This study aims to reveal the relationship between foreign capital investments in the Turkish banking sector and economic growth, which is one of the unique strengths of macroeconomic stability in the Turkish economy, and to test the effects of foreign capital investments on the country?s economy. As in many developing countries, the most determining factor in the economic growth of the Turkish economy is ?capital?. For Turkey is a country with a lack of capital stock and/or savings gap, and so it needs in the realization of its stable and sustainable growth and development goals a key role undertaken by the ?banking sector? acting as the heart of the financial system. In the study, foreign capital inflows into the Turkish banking sector were taken into consideration within the scope of "direct foreign investments". From this perspective, the Quantile Regression Method was used in the empirical analysis of the relationship between the foreign investments in the Turkish banking sector, the foreign banks and economic growth; and the model was designed with the data set comprising the three-month data between January 2002 and June 2016. And with the dependent variable of GDP and independent variables of, EQU_TAR, FBA_TBA, TFBCR_GDP, TFBD_GDP. The main finding obtained was that as the value of the GDP variable increases (ie, from 0.25, lowest income level, to 0.50 median income to 0.75, highest income level), not only effect levels of the independent variables on GDP increase, but also Pseudo R2, the significance of the model and/or the explanatory power of the model, has an increase at the same rate. From this angle, it was concluded that as foreign investments in the national economy or national banking sector increase, economic growth or developmental processes of the country will gain an impetus at the same degree.